NZ, Australian businesses report higher costs, more risks due to Middle East conflict

Businesses on both sides of the Tasman are reporting widespread economic damage caused by the Middle East conflict.

A survey of nearly 700 members by Chartered Accountants Australia and New Zealand (CA ANZ) indicates 80 percent of businesses were seeing increased costs with 60 percent reporting heightened risk and uncertainty in decision-making.

"This is not a distant crisis. It is landing on Australian and New Zealand businesses right now, and our members are seeing it firsthand across every sector of the economy. CA ANZ represents 140,000 finance professionals. What they are telling us matters, and government needs to listen," CA ANZ chief executive Officer Ainslie van Onselen said.

"The findings reflected a defining economic challenge for both countries."

The survey of chartered accountants included finance leaders across industries with broad visibility, including manufacturing, retail, agriculture, logistics and healthcare in New Zealand and Australia.

About one-in-five businesses indicate they would raise prices, with New Zealand at 24 percent and Australia at 17 percent.

About 6-in-10 reported their organisation was directly exposed to the conflict's economic effects, with greater impact in New Zealand (68 percent) than Australia (55 percent). A further 21 per cent said it was too early to assess the full impact.

Of those exposed, higher energy costs were the most common concern (77 percent), followed by supply chain disruption (46 percent), higher production costs (40 percent), shipping and freight delays (40 percent) and exchange rate volatility (36 percent).

New Zealand businesses were more exposed to shipping disruption, with 48 percent reporting freight delays compared to 32 percent in Australia.

CA ANZ chief economist professor Richard Holden said the pain was unlikely to be short-lived.

"Higher energy prices don't just hit at the bowser, they push up the cost of food, freight, manufacturing, meaning everything increases in price. Businesses and households are already under pressure. This makes it worse."

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